Who earns big(ger) with the new AA bonuses?

An entertaining conversation formed early yesterday evening on Facebook when it was suggested that my analysis of AA’s new premium fare bonus earning was just trying to be contrarian and that it missed out on the value the new rates would bring to AA’s most valuable customers. My view (both before and even more so now) is that the new rates are still AA playing catch up in most cases to the new UA and DL earning rates for higher fares. The high value fliers are going to still do better on UA or DL, I believe. And these are some of the numbers I came up with which I believe represent that.

All fares (except JFK-LAX) were searched based on round trip purchase but published here as one way trips because that’s how I was doing the math in the spreadsheet. The first number for each city pair is the discounted business class fare (generally an “I” fare) and the second is either “C” or “D” and earns the larger bonus. I broke the numbers down by elite status tier to get a feel for where each type of passenger might do better. For the sake of easier math I did not try to back out all the taxes on the UA/DL fares so those numbers will be a little high. Because of that there may be one or two places AA should “win” but it doesn’t. I’ve tried to call attention to those where I notice them.

I chose the cities partly based on what AA used in its examples, partly based on specific routes others suggested favor AA and also based on randomly thinking of city pairs. It is highly non-scientific but there is still some interesting data to show.

No Status

For the non-status passenger AA is rather stingy with the bonuses. Passengers on discounted fares get nil and the full-fare tickets get a relatively small bonus. At the $800 price point for JFK-LAX AA might be on par with UA and DL after the latter pair back out taxes but it is close. And for the discounted ticket on a connecting itinerary to Seoul AA wins handily. In pretty much every other situation the revenue-based earning offers better accrual.

The 25K Tier

Fly just enough to get a little elite status? AA might have a couple scenarios which work in your favor. The connecting flights to Seoul once again are winners as is the discounted transcon. And the discounted DFW-EZE trip mightbe competitive after taxes are removed.

The 50k Tier

A bit more status shifts the numbers marginally but, for the most part, the story stays the same.

The 75k Tier

AA doesn’t have a 75k tier but DL and UA do. This creates some interesting adjustments in the numbers. For the discounted JFK-LAX flight it is probably a wash and Seoul is holding on for AA. Also of note is that this is where a round-trip fare would, for the first time in the data, exceed the 75k cap which UA and DL have imposed. That number is still greater than what AA offers in earnings, however.

The 100k Tier

AA and UA both have the 100k tier and AA adds in higher bonus earning under the new program at that point as well. This helps AA become competitive in some markets again, including finally beating the 75k cap on the JFK-SYD trip, assuming the traveler doesn’t buy the full fare as a pair of one-way tickets.

The 125k Tier

Fly enough to hit Diamond with Delta on premium cabin trips? If so there’s a pretty good chance you’ll earn more points under the revenue-based program the company is implementing in 2015.

Other Thoughts

I’m not opposed to the new bonus structure at all. Like I said before, I think this is the closest AA could get to revenue-based easily without rebuilding the technology handling the systems and they didn’t have time to do that with the merger ongoing. But I still see it as playing catch-up FAR more than getting ahead. Sure, I picked only seven routes to compare but I doubt the numbers are going to look too much different with lots more data.

I suppose it is also worth noting that all the fares chosen are what AA is charging, not the UA or DL rates. If those carriers are flying the route for less money then the earnings will be lower. I suppose it is up to the passengers if they want to pay extra cash just to earn a few more miles in cases where the fares are different.

And then there are the fare sales. If you’re mostly just playing the game and looking to cherry-pick great deals then the premium cabin sales offered up when business travel decreases around holidays then you’re likely to do well with the new bonus rates. But, again, I don’t think those are the passengers the airlines truly want to be chasing and rewarding big.

Finally, there are definitely cases where AA wins in the charts above. I’ve highlighted them and everything. But the cases where they do not win are the ones I find most interesting. When AA comes up short against UA or DL in these numbers it does so with great style and panache. Which is to say it often gets beaten badly. Earning rates 20-50% higher for full-fare tickets are not uncommon with the revenue-based programs. Beyond that, comparing the redemption rates is important but I don’t believe there is one perfect answer there. I definitely don’t believe that any one program is 30-50% more valuable than another one, though a lot of that depends on personal redemption habits.

In the end there is no perfect answer. And it is nice to see AA trying to stay in the game. But I truly believe that’s about all this move buys the AAdvantage program.

Got other city pairs you want me to check? Leave a comment and I’ll put them in to the spreadsheet.

11 Responses

You’re doing the math here based solely on premium cabin purchases. The AA scheme is noteworthy specifically because it (yes) catches-up for premium cabin purchases, but also does not negatively influence economy cabin purchases.

The corporate flyer who is allowed to purchase C to Asia but must fly the lowest Y fare in the lower 48 is actually substantially more common than the exec who is allowed to purchase F no matter where s/he flies. AA catering to a market which rewards loyalty across the board, but rewards the premium cabin flyers even more is the item of note here, unlike DL who has trashed earnings of Y flyers to fund their premium cabin rewards.

Fair point, though the “cheap” domestic hops are not necessarily going to favor the AA program. It depends on how far in advance they’re buying, among other things. Even my recent work trips NYC-BNA were pricing around $700 r/t buying a couple weeks out. That’s 7k in a revenue-based scheme or 3100 distance-based.

There are going to be plenty of business travelers for whom the new programs suck. I won’t dispute that at all. But there are a lot who will benefit quite nicely from it as well.

Even booking a week or two out I have no issue finding RT’s well under $2000 and often under $1500 to Europe. I can spend a bit more for upgrade eligible fares but otherwise stick to lowest priced fares. The vast majority of flyers are even more budget conscious than I am. Sometimes the situation dictates that I need an expensive fare but mostly not. The number of people who go for these crazy expensive fares all the time is really small. I guess they can fly Delta or UA, but AA still provides a good option for the rest of us.

Sure, but if you’re flying on a $1500-2000 coach fare these bonuses don’t apply to you. And a $2000 fare at top tier earns 20k points in the UA/DL scheme. Depending on where you start and finish between the US and Europe a miles-based earning on that fare will be in the same ballpark. No real AAdvantage, so to speak.

Seth I think you make a great point in your comments about short haul flights like NYC-BNA. I often fly similar 300-700 mile flights out of NYC and typically pay (on short notice, usually in Y) $700-1000. These AA bonuses don’t address at all the huge gap in earnings I or similar travelers will see
– No status: AA 600-1400 rt, UA/DL 3500-5000
– 75k: AA 2000-2800, UA/DL 6300-9000
– 125k: AA 2000-2800, UA/DL 7700-11000

Good post. One other piece you are missing is if you can’t fly direct from either SFO/LAX or JfK to either Europe/S America from the west coast or to Asia/Oz from the east coast and have to sneak in an extra connection in one of those cities. You would earn an extra 24K as a 100k flyer each r/t

I think Dan hit it well. Someone who flies a mix of cheap domestic and premium international will likely do better on AA because, on AA, there’s a baseline of “a mile flown is a mile earned,” with bonuses as gravy on top. So, even if an occasional flight would have a much larger bonus on UA or DL, the overall mix of flights won’t.

Only if the “cheap” flights are actually cheap and also reasonably long. Transcons or midcons are going to suck for earning in discount coach fares. But the <1000 mile trips (up and down the coast) will be interesting to watch depending on the fares involved.

I seem to fly to LHR quite a bit. A good 20% of the cost on SFO-LHR is taxes. A 1K on a $1500 flight RT would earn +/- 13500 miles under United’s revenue based earning vs a EXP earning +/- 21500 on AA.

“An entertaining conversation formed early yesterday evening on Facebook when it was suggested that my analysis of AA’s new premium fare bonus earning was just trying to be contrarian”

Apparently I didn’t communicate very well, because I was not suggesting your number crunching was wrong. I was suggesting that your belief that AA would go revenue and that it was good for them was partially motivated by a desire to be contrarian vis a vis the rest of the FT/BA world. I was amused at how a factual announcement about earning changes by AA can be interpreted simultaneously as the “first step towards the inevitable revenue-based program transformation” and simultaneously by others as an indication that AA is holding the line with a mileage-based program in order to line up behind Alaska Airline’s strategy to get a business boost from its FFP’s more broadly rewarding nature (see blog post written by AS highlighting this).

I was not responding to your number crunching, but I was responding to your *beliefs* about the future of the AA program and was SPECIFICALLY answering the question you asked on that Facebook post: “American Airlines is offering up heaps of bonus points for premium customers. I see this as the first step towards the inevitable revenue-based program transformation. What do you think??”